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Markets Pulse

Dow’s Gain Is Biggest Since Election

By Matt Jarzemsky

Stocks posted their biggest daily gain since the U.S. presidential election, after lawmakers said budget talks with the White House were “constructive.”

The Dow Jones Industrial Average rose 45.93 points, or 0.4%, to 12588.31, reversing a morning slide of as much as 71 points, but declined for the fourth consecutive week, down 1.8%, the longest such slump since August 2011.

The Dow has dropped in six of the past eight trading sessions since the Nov. 6 presidential election, which turned investors’ attention to the looming “fiscal cliff,” a series of tax increases and automatic spending cuts that would go into effect on Jan. 1 if a budget deal isn’t reached.

Ranking Senate and House of Representatives members from both political parties said opening negotiations on a deal were productive. Senate Minority Leader Mitch McConnell (R., Ky.) said measures to raise tax revenue were “on the table.”

“If you continue to see reports like this, and not just talk but hard numbers and hard plans, the market will get a little more comfortable that something constructive will happen,” said Ryan Larson, head of equity trading at RBC Global Asset Management.

On the economic front, U.S. industrial production fell 0.4% last month, the Federal Reserve reported, bucking economists’ expectation for a 0.2% increase. Superstorm Sandy’s battering of the East Coast depressed manufacturing activity. Capacity utilization also decreased. Output figures for September were revised lower.

European markets lost ground, with the Stoxx Europe 600 down 1%, as the start of fiscal negotiations in the U.S. and the escalation of hostilities between Israel and Palestinian militants fed into investor anxiety. The index, down 2.7% on the week, has fallen the past two weeks.

Asian markets were mostly lower on the back of U.S. losses over the previous several days. China’s Shanghai Composite shed 0.8% and Australia’s S&P/ASX 200 gave up 0.3%.

Japan’s Nikkei Stock Average shot up 2.2%, after rising 1.9% Thursday. Japan lowered its outlook for the economy for a fourth straight month, fueling hopes that a victory by the opposition Liberal Democratic Party in next month’s election would lead to more monetary stimulus measures.

Crude-oil prices rose 1.4%, to settle at $86.67 a barrel, while gold prices added 0.1%, to settle at $1,714.30 a troy ounce. The dollar rose against the euro and yen. The 10-year Treasury note was slightly higher in price to yield 1.573%.

In corporate news, Dell tumbled 70 cents, or 7.3%, to $8.86, after reporting late Thursday that its quarterly earnings nearly halved. It also gave a cautious revenue forecast. Fellow PC maker Hewlett-Packard, due to report its results next week, dropped 23 cents, or 1.8%, to 12.85.

Gap rose 33 cents, or 1%, to 33.59, after the retailer raised its earnings forecast for the year. North American same-store sales expanded at Gap stores and at the company’s Banana Republic and Old Navy chains.

Sears Holdings tumbled 10.99, or 19%, to 47.49, after reporting a wider loss for the latest quarter. Same-store sales continued to weaken.

Penn National Gaming rallied 10.62, or 28%, to 48.23, after the casino and racetrack operator said it would spin off real-estate assets to shareholders, creating a new publicly traded real-estate investment trust.

Ruckus Wireless, a maker of gear for wireless Internet providers, slid 2.75, or 18%, to 12.25, after its initial public offering on the New York Stock Exchange. The deal had priced at the high end of its expected range.

Facebook jumped 1.39, or 6.3%, to 23.56, capping its biggest weekly gain, 23%, since its May initial public offering. The shares have held up despite the expiration of some lockup agreements this week. Those agreements had prevented some early holders from selling shares.